Software Sweatshop – Inside Billionaire Joe Liemandt's Empire | Hacker News Reader

Software Sweatshop – Inside Billionaire Joe Liemandt's Empire

colinkeeley.com

119 pointsfiggychi54 comments

Why the flamebaity, judgemental, artificial HN title for a very objective descriptive article?

I've read the article and find the title quite apt, as a sweatshop is:

> a factory or workshop...where manual workers are employed at very low wages for long hours and under poor conditions.

They refer to their process as a 'factory model', and if those aren't poor conditions then why is their attrition rate so high?

> Otherwise please use the original title, unless it is misleading or linkbait; don't editorialize.

https://news.ycombinator.com/newsguidelines.html

Not manual work, not low wages (far from it), not likely to be long hours. “Poor conditions” are more open to interpretation, but they are working from their homes, so not “poor workplace condition”.

"Tryba argues that the current cloud wage for a C++ programmer is $15 an hour, the minimum wage at many US companies."

Additionally many of their new contractors are US based. Bus drivers make more than that(~18 USD). You are WAY OFF BASE.

Hold on with your caps lock.

Minimum wage in Brazil would be less than USD1.50/hour (in today's exchange rate, assuming you are earning for 40 hours/week). 10x the minimum wage for a junior position is a great wage.

Also, I don’t think the american contractors earn the same rate of the ones in poorer countries. It seems very unlikely to me.

15 dollars an hour is great pay if you're in India

Perhaps if you employs third world devs, but I doubt you get anything of quality for that price. That said, there is enough economically successful software with awful quality.

They don’t work for very low wages though… the wages are usually quite high relative to the local COL

I think it's better to follow guidelines and use the correct title, too, but I disagree that it is very judgmental. They fire US based staff after an acquisition, have 69% annual attrition, use spyware on their international contractors, and use accounting (NOL carry forwards) and patent trolling tactics to increase returns... at least allegedly per the article. Most people here would not want to work at a place like this. It sounds like it checks a lot of boxes for a sweatshop.

Agreed. @dang can we change the title? The words "billionaire" "sweatshop" or "empire" never appear in the article, let alone the title.

Reasonable people can disagree about this approach to building and running software companies. The article does a good job describing how a sort of a CA for the SMB market functions. It's an interesting and informative read, regardless of how you feel about it

While you're correct for 2/3 words, "billionaire" is the fifth word in the article:

> Joe Liemandt is the billionaire founder and CEO of Trilogy Software and ESW Capital

I agree that the article is good and useful, but the title is too much.

Flagged it until title is changed.

A tactic not mentioned is for Crossover to advertise US jobs with insanely good salaries. Based on the business model, I am inclined to think that these were (two or three years ago when I saw them) misrepresentations of actual pay, designed to appeal to hungry applicants.

They still do it. What is the deal with them? I see these ads for $800K jobs on my LinkedIn, but everything around it when you google Crossover smells, so I've never applied.

Does anyone know?

The deal is things smell for a reason, and unless you like the smell, it is best to stay away.

I live in Canada and at one point I was seeing several of these these "Crossover For Work" posts on LinkedIn every week. For everything from junior dev to VP of software engineering (!). They always seemed kind of suspicious, especially the part where they apparently teach you how to not write any bugs.

Some names I recognize:

    Jive Software
    Engine Yard

Going down the Engine Yard --> Dev Graph rabbit hole, you find they also own Fog Bugz https://fogbugz.com/

I guess you don't need 10x developers to write bug tracking software like Joel said...

Honestly sounds like a good exit strategy for failed or low-traction companies. Take the money and run.

They talk about Jack Welch and his impact on ESW, and it's worth considering Welch's legacy: https://www.thestreet.com/opinion/the-sad-story-of-jack-welc...

This seems to be a classic Private Equity play, but focusing on software. As much as I'd never want to work for or buy from one of these companies, it's smart and there are many reasons why it works.

Why is it smart? At best it is short sighted profit while ignoring the human factor. I wouldn't call that smart, just greedy and abusive.

You don't need elite Stanford CS PhDs to maintain a 20 year old enterprise payroll processor or network monitoring service. Polish and Ukrainian devs can do that work perfectly well.

Have a small sales team that does just enough work to cover whatever your churn rate is, and your business will print a stable amount of money for a long time. Combine this with acquiring at low multiples, and it's a decent strategy.

Sure, you might not grow your platform at 80% a year, with massive series A, B, C, D, E, and a unicorn IPO, but you don't need to for the strategy to work over the long term.

> You don't need elite Stanford CS PhDs to maintain a 20 year old enterprise payroll processor or network monitoring service. Polish and Ukrainian devs can do that work perfectly well.

This is most bigoted statement I read on hn recently. What is your work? For some reason I'm quite sure that a lot of Ukrainian or Polish devs can do it "perfectly well" also...

I work in customer support. Most of my profession is made up of overseas workers, and they do their jobs as well or better than me. In fact, Polish and Ukrainian devs would be overqualified for what I do.

My comment isn't denigrating IT professionals in foreign countries. It's stating that hiring capable, but less credentialed workers is not a losing strategy by default. The parent comment I replied to seemed to assume that replacing domestic employees with foreign employees was the fast track to business ruin. I happen to disagree with that.

This is a FCF play[0]. The lower your COGS, the more FCF it generates every month.

[0]https://corporatefinanceinstitute.com/resources/knowledge/va...

It is smart because they buy up "not so great" businesses and squeeze money out of them.

Where the founder could die on the hill fighting for bright future and burn cash.

While as I read their buying tactics and employee dumping tactics it is despicable. But in life there is also place for scavengers that play important role ... because maybe company they bought would die in even worse way then what they do.

not necessary:

These companies have limited traction, keep them as is and they will die a slowly death after some years.

Or significantly reduce costs (by going offshore - probably with a smaller team), makes numbers much more attractive and sustainable long term.

In my experience, "going offshore" as you put it, simply prolongs an inevitable death, while simultaneously funneling more money to the top.

There is a lot of less critical IT work that can be sweatshopped in India and other Asian countries. In fact considering the huge labour shortage and increasing population decline/aging of G20 countries I see it as inevitable.

my friend (chinese-american) has a iOS app company that contracts Chinese devs. he has a small team in the US that does gfx design, sw management and marketing. all the coding is done in china by 5-8 devs on contract who knows some english. since he knows Chinese and has Chinese speaking managers they can make it work. he calls it software development arbitrage and he expects it accelerate in the next decade. they are alot of smart and capable sw devs in 3rd world countries that are willing to code for $5-10/hour

I don't understand. What American software engineer who's capable of passing their hiring process would ever agree to work for them? Is it just that they're deceiving people who then get locked in? Are these talented engineers not Googling the company?

I can see how this could be sustainable in India or Poland or Ukraine, but it says 17% of their workforce is located in the US. In this job market, how?

I'm not sure about engineers outside US. I have noticed their never-ending job ads in local market, e.g. senior software engineer position for rate that rather lower mid-level devs get here.

Maybe pre-pandemic this was appealing for those who wanted remote position, but now there are plenty of other remote friendly opportunities.

My friend worked as a software tester/QA at Crossover and the article is accurate compared to what my friend's experience was.

Seems like Joe Liemandt is killing American jobs. I wonder how many other people like him are out there destroying the american economy

I wonder how he makes money? If the said companies are in trouble or in bancrupcy doesn't that mean that their software doesn't present much interest to potential customers?

How's that working out with the current job market?

There are multiple software engineer labor markets and these guys are not competing with Facebook and Google for staff. They're probably fine.

>> How crazy is the market?

>> Hearing rates for sr software engineers in Ukraine - a popular place to hire good talent for "good value" - have gone from about $5,000/month (€50K/year) to $8,000/month (€80K/year) in one year. Taxes are 5-10% in Ukraine.

>> Why? COVID + rising demand.

https://twitter.com/GergelyOrosz/status/1399674746879553538

He have plenty more tweets

talking about how employees will more likely hire remote (home country) than go through the hassle of doing VISAs (EU/US)

The global rates will be increasing and converging (to a degree)

I hope they realize that by doing that, they'll keep innovators and folks who can build a tech scene in their home countries instead of America.

These tech scenes will then pop out competitors to US firms.

Tell that to the people that make the visa processes so complicated (I have first hand experience). It takes a lot of work and money, You can't travel easily (have to get stamps abroad at risk of loosing job if you get in administrative review), with some of the visas for the most talented people (O1) you have to exit the country immediately if you loose your job, why would you ever want to go over all that again unless you have ties in US (which often you didnt have time to make with 1-3 years visas). Also the tech scene is already popping out outside of US but as it is not english-first it is harder to observe from the US. Immigration policies for talented workers have gone from hard to repulsive and even if it gets reversed now (there isn't a lot to do, and the impact on the economy could be huge) it will take at least a decade to undo the damage... And this is not just the repeated attacks from the previous administration, this started way before.

Sure, but rising demand will also make all of their companies' revenue go up too.

They don't need good talent. And there's always a surplus of what they need.

So from the manner in this was written .... they're evil?

That's what I get from it as well. Ignore all externalities, rip and tear until you have extracted everything you can. Apparently good for making some money, and pretty bad for humans.

Yeah from description sounds like Oracle just with smaller companies.

They probably juice vendor locked SMBs quite hard on all fronts. Then as they go over what companies can pay for they shut down that venture of theirs and distribute profits over the network to not pay taxes but CEOs, board members get their pay day.

Or, at least, this sort of approach generally isn't great for most stakeholders (users, employees). It can work for owners, sometimes.

well, they're taking jobs from a rich country to give them to poor countries. so there's a certain robin hood side I guess

It is a C-suite funded robinhood venture, so the two ends are benefiting by squeezing the middle.

Perhaps one should ask their contractors.

Clearly vile

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